"The plummeting costs of solar mean we've got no option but to act so that we stay within budget and not threaten the whole viability of the Fits scheme," said Barker. "Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won't come as a surprise to many in the solar industry who've themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year."

The department of energy and climate change admitted its expectations had been far too low, with three times as much solar installed as it had projected, with over 100,000 installations so far.

The cut will almost double the payback period for householders, meaning someone installing £10-12,000 solar panels will only be in credit after 18 years rather than 10. The rate will be reduced from 43.3p per kWh of solar electricity to just 21p, cutting returns from around 7% to 4%."